Buying your first home is mostly a sequence of decisions made in the right order: what you can spend, which loan fits, who represents you, and what you check before the deal is final. This guide walks through that sequence for a purchase in Charlotte and the surrounding North Carolina counties, with the North Carolina rules that tend to surprise first-time buyers.
It is general information, not financial or legal advice. A licensed lender can tell you what you qualify for, and a North Carolina real estate attorney can answer contract questions.
Who counts as a first-time buyer
There is no single definition. Each program sets its own. For its NC 1st Home Advantage Down Payment, the North Carolina Housing Finance Agency (NCHFA) treats you as a first-time buyer if you haven't owned a home as your principal residence in the past three years, so someone who sold a home years ago may qualify again. Other programs, including NCHFA's main mortgage, are open to buyers who already own a home. My down payment assistance guide sets out each program's rule.
Step 1: Budget for more than the down payment
The down payment is the number most people focus on, but it is not the only cash a purchase needs. Plan for:
- Closing costs, such as lender fees, title and recording charges and prepaid taxes and insurance. Your Loan Estimate lists them.
- The due diligence fee and earnest money in a North Carolina purchase. Both are explained in Step 6.
- Inspections and an appraisal, usually paid during due diligence.
- Homeowners insurance and property taxes, often collected monthly with your mortgage payment.
- Reserves for repairs and the first months in the home.
Step 2: Get preapproved and compare Loan Estimates
A preapproval from a licensed lender tells you, and sellers, roughly how much you can borrow. It is worth getting a Loan Estimate from more than one lender. The Loan Estimate is a standard form, so you can compare lenders line by line, starting with the origination charges, rather than comparing quotes in emails.
Your credit score affects which loans you can get and at what price. Requirements vary by loan type, program and lender. NCHFA's NC 1st Home Advantage Down Payment, for example, requires a credit score of 640 or higher, so ask each lender what score its programs need.
Step 3: Know the main loan types
Most first-time buyers use one of four kinds of loan. Each has its own minimum down payment and eligibility rules, so treat these as starting points to discuss with a lender:
- FHA loans are insured by the Federal Housing Administration. HUD says your down payment can be as low as 3.5% of the purchase price.
- Conventional loans are not government-insured. Some conventional programs allow small down payments: Freddie Mac's Home Possible mortgage, for example, allows a 3% down payment for borrowers who meet its rules.
- VA loans are for eligible veterans, service members and some surviving spouses. The Department of Veterans Affairs says nearly 90% of VA-backed loans are made with no down payment.
- USDA guaranteed loans allow 100% financing, but only for homes in areas USDA designates as eligible rural areas, so ask your lender to check the address.
Step 4: Take a homebuyer education course
Homebuyer education covers budgeting, credit, the loan process and what happens at closing. Many assistance programs require it, including the City of Charlotte's HouseCharlotte program, as my down payment assistance guide explains. In Charlotte, DreamKey Partners offers courses with HUD-certified counselors. Even if no program requires it, a course is a low-cost way to learn the process before you are under contract.
Step 5: Choose an agent and sign a buyer agreement
As of August 17, 2024, an agent who is an MLS participant and is working with you must have a written agreement with you before touring a home, in person or by live video. The agreement sets out what the agent will do for you and how the agent will be paid. Compensation must be stated clearly, not left open-ended, and it is negotiable.
North Carolina's own rule is that buyer agency agreements must be in writing and signed no later than the time of making an offer. In practice, expect to review and sign an agreement before your first showing. Read it the way you would read any contract: the term, the services, the compensation and how either side can end it.
Step 6: From offer to closing in North Carolina
North Carolina purchase contracts usually include a due diligence period, a window in which you inspect the home, get an appraisal, line up insurance and finalize your loan. Two payments come with an offer:
- The due diligence fee is paid directly to the seller, usually when the contract is signed. If the sale closes, it is credited to you at closing. If you terminate during the due diligence period, the seller keeps the fee, apart from a few exceptions such as a material breach by the seller. Offer only an amount you could afford to lose.
- Earnest money is a separate deposit. According to the North Carolina Real Estate Commission, a buyer who terminates during the due diligence period typically gets back the earnest money but not the due diligence fee, unless the parties negotiated otherwise. After the period ends, the earnest money is at stake.
Once due diligence is behind you, the lender finishes underwriting. Your lender must give you the Closing Disclosure three business days before your scheduled closing. Compare it line by line with your last Loan Estimate, and ask about anything that changed before you sign.
Down payment assistance
Eligible buyers in the Charlotte area may qualify for down payment assistance through NCHFA, the City of Charlotte's HouseCharlotte program or, in York and Lancaster counties, SC Housing. Each has its own income, price and location rules and its own repayment terms. My separate guide to down payment assistance in Charlotte covers them.
How I can help
I help first-time buyers in English and Korean across Charlotte and the surrounding counties. I can walk you through the buyer agreement before you sign it, help you plan an offer around the due diligence period, and coordinate with your lender so the timeline works. If you are not sure where to start, a short conversation about your budget and the areas you are considering is a good first step.
Sources and Further Reading
- North Carolina Housing Finance Agency: NC 1st Home Advantage Down Payment
- Consumer Financial Protection Bureau: Closing Disclosure explainer
- U.S. Department of Housing and Urban Development: Loans: FHA
- Freddie Mac: Home Possible
- U.S. Department of Veterans Affairs: VA Home Loans
- USDA Rural Development: Single Family Housing Guaranteed Loan Program
- National Association of REALTORS: Written Buyer Agreements 101
- North Carolina Real Estate Commission: NAR Settlement
- North Carolina Real Estate Commission: Due Diligence Fees: When Are They Refunded?
- North Carolina Real Estate Commission: "Due Diligence" Questions and Answers
Frequently Asked Questions
It depends on the loan, the program and the lender, so there is no single number. As one example, NCHFA's NC Home Advantage Mortgage requires a credit score of 640 or higher (660 for a manufactured home). Ask each lender what its programs require before you apply.
Usually not. The fee is paid directly to the seller and credited to you at closing if the sale goes through. If you terminate during the due diligence period, the seller generally keeps it, with a few exceptions in the standard contract such as a material breach by the seller.
If your agent is an MLS participant, yes: since August 17, 2024, a written agreement is required before touring a home, in person or by live video. North Carolina's rule also requires a written buyer agency agreement no later than the time you make an offer. The terms, including compensation, are negotiable.
